Bridgewater Bancshares, Inc. · NASDAQ:BWB
Bridgewater Bancshares — Q4 2022 Earnings Presentation
33 slides from Bridgewater Bancshares's earnings presentation, Mar 6, 2023
Slide 1: Investor Presentation Fourth Quarter 2022
w BRIDGEWATER ™ BANCSHARES, INC. Be INVESTOR PRESENTATION FOURTH QUARTER 2022
Slide 2: Disclaimer - Forward-Looking Statements
Disclaimer Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, statements concerning plans, estimates,
Slide 3: The Finest Entrepreneurial Bank Company Overview
The Finest Entrepreneurial Bank Company Overview Branch-Light Model in Attractive Twin Cities Market Twin Cities MSA Name: Bridgewater Bancshares, Inc. Headquarters: St. Louis Park, MN Ticker: NASDAQ: BWB; BWBBP Assets: $4.3 Billion Loans: $3.6 Billion Deposits: $3.4 Billion Shareholders’ Equity: $3
Slide 4: Strategic Leadership Team with Broad Skill Sets and Industry Expertise
Strategic Leadership Team with Broad Skill Sets and Industry Expertise 4 Jerry Baack Chairman, CEO and President • Past regulator and responsible for all aspects of BWB formation • Lead founder of BWB in 2005 • 30+ years of banking experience Jeff Shellberg EVP and Chief Credit Officer • Holding com
Slide 5: A Culture-Driven Organic Growth Story
A Culture-Driven Organic Growth Story 5 Consistent Profitability and Shareholder Return Truly Unconventional Culture Highly Efficient Business Model Robust Balance Sheet Growth Proactive Risk Management • Entrepreneurial spirit unlike the culture at a typical bank • New HQ with modern, open layout p
Slide 6: Our Core Values
Our Core Values Unconventional. Our clients notice a difference. Responsive. Under promise, over deliver. Dedicated. Don’t stop until you get it done. Growth. If you aren’t moving forward, where are you going? Accurate. It’s more than just an expectation. 6
Slide 7: An Award-Winning Workplace Culture
An Award-Winning Workplace Culture “In today’s environment, it is more important than ever to be able to recruit, retain and develop top talent. At Bridgewater, we have demonstrated an ability to do this through our unconventional culture and employee experience, extensive team member referral netwo
Slide 8: A Responsive Service Model
A Responsive Service Model Our clients can expect… • Responsive support and simple solutions • A local bank of choice in a market where many local banks have left • Flexibility, market expertise and strong network connections 8 The “Proven Process” for Our Clients • #1 BEST Business Bank • #1 BEST S
Slide 9: A Commitment to Our Communities
A Commitment to Our Communities Our communities can expect… Bridgewater’s commitment to investing, lending and volunteering in ways that serve low-to-moderate income segments in the Twin Cities ‘Outstanding’ Rating for Community Reinvestment Act Performance FDIC, 2020 9 $315K Total Contributions in
Slide 10: Environmental, Social and Governance (ESG)
Environmental, Social and Governance (ESG) 10 We are committed to establishing and advancing impactful initiatives that support our corporate responsibility as a growing local bank in the Twin Cities, while regularly sharing our progress with our stakeholders Our ESG Commitment Our ESG Priorities Te
Slide 11: Attractive Twin Cities Market Built for Business
Attractive Twin Cities Market Built for Business 11 #1 Fortune 500 companies per capita (16)1 Large Corporate Presence #1 State with highest average credit score (726)2 Credit Worthy Population #1 Best place for women entrepreneurs3 Women Entrepreneurs #5 State with educational achievement beyond hi
Slide 12: History of Organic Asset Growth Generation
History of Organic Asset Growth Generation 12 $1,184 $76 $929 $1,260 $1,617 $1,974 $2,269 $2,927 $3,478 $4,346 2015 2016 2017 2018 2019 2020 2021 2022 Organic Acquired Assets Proven ability to consistently generate 20%+ annual asset growth primarily in the Twin Cities market Asset growth has almost
Slide 13: Long Track Record of Robust Loan Growth
Long Track Record of Robust Loan Growth 13 $2,188 $2,793 $3,568 $138 $26 $1 $799 $1,001 $1,347 $1,665 $1,912 $2,326 $2,819 $3,569 2015 2016 2017 2018 2019 2020 2021 2022 Loans (ex. PPP) PPP Dollars in millions BWB Loan Growth Catalysts Strong brand and service model in the Twin Cities market Expandi
Slide 14: Commercial-Focused Loan Portfolio
354% 333% 318% 304% 313% 266% 264% 258% 180% 164% 185% 177% 204% 190% 219% 257% 534% 497% 503% 480% 517% 456% 483% 515% 2015 2016 2017 2018 2019 2020 2021 2022 Commercial-Focused Loan Portfolio 14 CRE NOO 27% Multifamily 21% C&D 15% 1-4 Family 18% CRE OO 6% C&I 13% Consumer & Other 0% $0.8B Evolutio
Slide 15: Strong Diversification Across Key Portfolios
Strong Diversification Across Key Portfolios 15 5-19 Units 13% 20-49 Units 26% 50-99 Units 28% 100+ Units 33% Size YoY Growth Go-to-Market Strategy Competitors Growth Outlook Key Stats Portfolio Diversification Multifamily CRE Nonowner Occupied Construction & Development C&I Bank of choice in the Tw
Slide 16: Deposit Market Share Momentum in the Twin Cities Continues
Deposit Market Share Momentum in the Twin Cities Continues 16 Total Deposits – Minneapolis/St. Paul MSA1 2012 2022 Market Ripe for Continued Market Share Gains • Top-heavy deposit market (top 2 market share = 62%) • Top 2 have lost market share each of the last eight years (2014: 84% / 2022: 62%) •
Slide 17: Managing Core Deposit Pressures Driven by Rising Interest Rate Environment
Managing Core Deposit Pressures Driven by Rising Interest Rate Environment 17 22% 23% 22% 24% 25% 27% 30% 26% 17% 13% 13% 11% 14% 15% 18% 13% 20% 23% 28% 26% 28% 26% 29% 30% 25% 27% 22% 20% 20% 14% 10% 8% 16% 14% 15% 19% 13% 18% 13% 23% $762 $1,024 $1,339 $1,561 $1,823 $2,502 $2,946 $3,417 2015 2016
Slide 18: Scaling Enterprise Risk Management Across a Growing Organization
Scaling Enterprise Risk Management Across a Growing Organization 18 Manage and mitigate dynamic risks while enhancing shareholder value, being responsive to clients, and delivering simple solutions in unconventional ways BWB Risk Management Philosophy Enterprise Risk Management Attributes in Place T
Slide 19: Credit Risk Management Supports Continued Loan Growth
Credit Risk Management Supports Continued Loan Growth 19 5-Year Peak Net Charge-off Ratio vs. Peers 5-Year Peak Nonperforming Assets2 / Assets vs. Peers 0.02% BWB Peer Bank Median1 0.17% 0.03% BWB Peer Bank Median1 0.56% 1 Includes publicly-traded banks on major exchanges with total assets between $
Slide 20: Credit Risk Management and Oversight Driving Superb Asset Quality
$20,031 $22,526 $34,841 $40,020 $47,996 1.59% 1.43% 1.35% 1.20% 1.18% 1.50% 1.42% 1.34% 2018 2019 2020 2021 3Q22 1 Nonaccrual loans plus loans 90 days past due and still accruing and foreclosed assets Dollars in thousands Credit Risk Management and Oversight Driving Superb Asset Quality 20 $581 $461
Slide 21: Spread-Based Revenue Model
Spread-Based Revenue Model 21 Net Interest Income Noninterest Income 1 Amounts calculated on a tax-equivalent basis using statutory federal tax rate of 21% 2 Excludes loan fees and PPP loan balances, interest and fees; represents a Non-GAAP financial measure, see Appendix for Non-GAAP reconciliation
Slide 22: Among the Most Efficient Banks in the Industry
46.5% 47.4% 49.0% 42.0% 41.5% 41.7% 43.3% 40.5% 41.0% 41.2% 59.2% 58.8% 57.1% 55.8% 55.7% 2018 2019 2020 2021 2022 Among the Most Efficient Banks in the Industry 22 BWB Adjusted1 BWB Reported1 An Efficiency Ratio Consistently Well Below Peers Peer Bank Median2 1 Represents a Non-GAAP financial measu
Slide 23: Leveraging Recent Technology Investments to Support Growth
Leveraging Recent Technology Investments to Support Growth 23 Client-Facing • Modern platforms and payment options for business and personal clients • Collaborative technology tools integrated into BWB Corporate Center • Cybersecurity threat detection and response Scalable core to support growth out
Slide 24: Proactive Capital Management
Proactive Capital Management 24 14.55% 12.98% 14.58% 15.55% 13.15% 12.07% 11.39% 10.35% 9.36% 8.40% 11.23% 10.69% 9.28% 10.82% 11.03% 9.55% 10.65% 8.96% 8.91% 7.48% 2018 2019 2020 2021 2022 Total Risk-Based Capital Common Equity Tier 1 Capital Capital Ratios Supported by Profitability and Capital Ma
Slide 25: Diverse Liquidity Position
Funding Source Available Balance Cash $ 48 Unpledged Securities 549 FHLB Advances 391 FRB Discount Window 158 Unsecured Lines of Credit 208 Secured Line of Credit 26 Total $ 1,380 Diverse Liquidity Position 25 14.3% 14.2% 18.4% 16.4% 13.7% 16.5% 18.9% 19.8% 26.2% 18.0% $608 $750 $1,121 $1,480 $1,380
Slide 26: Near-Term Expectations
Near-Term Expectations 26 • Balance sheet growth to slow from 2022 levels • High single-digit to low double-digit loan growth in 2023 – focus on aligning loan growth more closely with core deposit growth over the course of the year • Target loan-to-deposit ratio between 95% and 105% Balance Sheet Gr
Slide 27: 2023 Strategic Priorities – Positioning for Long-Term Success
2023 Strategic Priorities – Positioning for Long-Term Success 27 Manage High Quality Balance Sheet Growth 1 2 3 4 Maintain High Efficiency While Investing in the Business Proactively Assess and Monitor Asset Quality Risks Implement Longer Term Strategic Readiness Initiatives • Slower pace of balance
Slide 28: Corporate Strategy Driving Strong Returns and Value Creation
Corporate Strategy Driving Strong Returns and Value Creation 28 Truly Unconventional Culture Highly Efficient Business Model Robust Balance Sheet Growth Proactive Risk Management Our Culture Driven Organic Growth Story Return on Average Assets 1.51% 1.49% 1.24% 1.45% 1.38% 1.19% 1.21% 1.02% 1.32% 1.
Slide 29: Appendix
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Slide 30: 4Q22 Earnings Highlights
4Q22 Earnings Highlights 30 • Gross loan balances up $189.4 million, or 22.2% annualized, from 3Q22 • Investment securities balances up $6.6 million, or 4.8% annualized, from 3Q22 • Deposit balances up $111.5 million, or 13.4% annualized, from 3Q22 • Net interest margin of 3.16%, down 37 bps from 3Q
Slide 31: Efficiency Ratio Reconciliation
December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, Efficiency Ratio 2018 2018* 2019 2019* 2020 2020* 2021 2021* 2022 2022* 4Q22 4Q22* Noninterest Expense $ 31,562 $ 31,562 $ 36,932 $ 36,932 $ 45,387 $ 45,387 $ 48,095 $ 48
Slide 32: Reconciliation of Non-GAAP Financial Measures – PPNR
Reconciliation of Non-GAAP Financial Measures – PPNR 32 Dollars in thousands Pre-Provision Net Revenue December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 4Q22 Noninterest Income $ 2,543 $ 3,826 $ 5,839 $ 5,309 $ 6,332 $ 1,738 Less: Gain on sales of Securities 1
Slide 33: Reconciliation of Non-GAAP Financial Measures – Diluted EPS, ROA, ROATCE
Reconciliation of Non-GAAP Financial Measures – Diluted EPS, ROA, ROATCE 33 Dollars in thousands December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 4Q22 Net Income $ 26,920 $ 31,403 $ 27,194 $ 45,687 $ 53,392 $ 13,735 Less: Preferred Stock Dividends - - - (1,17
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